Sergio Marchionne, CEO of Fiat Chrysler Automobiles answers a question at the 2018 North American International Auto Show in Detroit. (Photo credit JEWEL SAMAD/AFP/Getty Images)
Fiat Chrysler Automobiles (FCA) shares slipped back slightly after CEO Sergio Marchionne threw cold water on speculation it might sell the Jeep SUV subsidiary. But the rally since the start of the year was holding up in European trading Thursday, with the shares still more than 30% higher on the year.
Analysts expect some spectacular action from Marchionne as he enters his last year before retirement, but they also point to some glaring weaknesses in the FCA empire, with Europe looking particularly vulnerable.
Marchionne, in a speech at the Detroit car show, said Jeep, expected to hit sales of 2 million this year, could help FCA double its net profit by 2022.
“We’re not going to break up anything. We have no intention of breaking it up and giving anything to the Chinese,” Marchionne was quoted by Reuters as saying.
FCA has already agreed the spinoff of components maker Magneti Marelli this year.
Professor Stefan Bratzel of the Center of Automotive Management (CAM) in Bergisch Gladbach, Germany, said FCA is clearly doing well in the U.S. with its highly profitable SUVs and pickup trucks but it has problems in Europe where it lacks scale.
“I think the situation with Fiat in Europe is quite bad. I can imagine there will be new efforts to sell some of its business because I don’t see a big future for FCA in Europe. It doesn’t have the technology to meet (E.U.) CO2 goals and the portfolio of cars is small and getting smaller. They also have a problem in China,” Bratzel said in an interview.
The only big seller in Europe is the little Fiat 500.
Fiat 500 Photographer: Tomohiro Ohsumi/Bloomberg